Fact Sheets

CMS releases annual update to data on hospital charge variation

CMS releases annual update to data on hospital charge variation

The Centers for Medicare & Medicaid Services (CMS) released its first annual update to data on hospital charges today. The data now includes inpatient and outpatient hospital charge data for 2012, as well as 2011, and shows what different hospitals in all 50 states and Washington, D.C. charge for similar services. Hospitals determine what they will charge for items and services provided to patients and these “charges” are the amounts the hospital bills for those items or services. The data show significant variation in average charges from hospital to hospital—including those within the same community—for inpatient services that may be provided in connection with a given inpatient stay.

The data include information comparing the average hospital charges for services that may be provided in connection with the 100 most common Medicare inpatient stays, such as services provided in connection with certain joint replacements or services provided to treat chest pain. This data enables comparisons between the average amounts charged by individual hospitals within local markets, and nationwide, for services that may be provided during similar inpatient stays.

Inpatient acute-care services are paid by Medicare based on the Medicare Severity Diagnosis Related Group (MS-DRG) to which the Medicare patient’s case is assigned. The MS-DRG is a classification system that groups similar clinical diagnoses and the procedures the hospital furnished to treat those conditions during the inpatient stay.

These data present average hospital charges for services that may be furnished in connection with the top 100 inpatient discharges billed to Medicare. CMS used the inpatient data from the Medicare Providers Analysis and Review (MedPAR) dataset for fiscal year 2012 to produce the data released today. The MedPAR dataset contains Medicare inpatient hospital claims for all Medicare beneficiaries enrolled in Medicare Part A (hospital insurance).

Nationally, inpatient charge amounts vary widely. For example, average inpatient charges for services a hospital may provide in connection with a joint replacement (MS-DRG 470) ranged from a low of $15,901 in Baltimore and a maximum payment of $239,138 in Los Angeles in 2012. The average national charge for DRG 470 was $50,132.

Even within the same geographic area, average hospital charges for similar services can vary significantly. For example, average inpatient hospital charges for services that may be provided to treat heart failure (MS-DRG 292) range from a low of $32,750 to a high of $142,000 in Newark, N.J. The lowest average charge for MS-DRG 292 was $4,930 at a hospital in Little Rock, Ark.; however, at another hospital in same Hospital Referral Region (HRR), the charge was $32,300. Hospitals in Santa Cruz, Calif. had similar average charges for MS-DRG 292, but these charges were some of the highest in the country, ranging from $65,800 to $69,500.

The map below highlights the variation in average hospital inpatient charges for services that might be provided in connection with certain joint replacements (MS-DRG 470) by HRR.

Average 2012 Hospital Inpatient Charges for Services that Might be Furnished in Connection with MS-DRG 470, Major Joint Replacement or Reattachment of Lower Extremity without Major Complications or Comorbidities
(National average = $52,249)

The release of 2012 data also allows for comparisons to the 2011 dataset CMS published last year. Charges increased between 2011 and 2012, but they went up less than five percent for the majority of DRGs. Chest pain (MS-DRG 313) had the largest increase in average charges, growing almost 10 percent from 2011 to 2012. On the other end of the spectrum, average charges increased less than one percent for intracranial hemorrhage or cerebral infarction with multiple complications and comorbidities (MS-DRG 64).

While average charges increased for all reported MS-DRGs between 2011 and 2012, there was more variation in charges in the number of discharges. The number of discharges increased for 31 MS-DRGs; however, the increase was less than five percent in most cases. For example, the number of discharges for services that might be provided in connection with certain joint replacements (MS-DRG 470) increased one percent. Of the MS-DRGs with a decrease in total discharges, chest pain (MS-DRG 313) was the largest, dropping nearly 20 percent.

The following map displays the change in average charges between 2011 and 2012 by HRR for MS-DRG 470. On average, charges increased by approximately $2,000 nationally.

Change in Average Hospital Inpatient Charges for Services that Might be Provided in Connection with MS-DRG 470 between 2011 to 2012
(National average change = $2,116)

The chart below shows the variation between 2011 and 2012 for hospitals in Manhattan, N.Y. for MS-DRG 286, circulatory disorders except acute myocardial infarction (AMI) with cardiac catheter and major complications or comorbidities. Nationally, average charges for MS-DRG 286 increased six percent from $61,700 to $65,600. However, in Manhattan, average charges increased from $72,500 to $87,100 – an increase of 20 percent. 

Average Hospital Inpatient Charges for Services that Might be Provided in Connection with MS-DRG 286, Circulatory Disorders except AMI with Cardiac Catheter with Major Complications or Comorbidities Manhattan, N.Y.  

To view the new hospital dataset, please visit: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html.

For additional information on how Medicare pays for inpatient hospital stays, please see: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/AcutePaymtSysfctsht.pdf.

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